62.At more than £1 billion a year, the CSSF contains a relatively large sum of money. It is more than half the FCO’s entire budget in 2015–16. And it is considerably larger than the Conflict Pool’s budget of £683 million in its final year in operation, 2014–15.
63.The Government told us that the CSSF benefitted from an “additional £350 million in funding in its first year (FY15/16)” as it made the transition from the Conflict Pool. However, a significant fraction of the “additional” money referred to by the Government was moved wholesale into the CSSF or repurposed from existing funds. For instance, the £50 million Deployed Military Activity Pool (DMAP), which comes under the ‘security and defence’ budget line of the CSSF, was not part of the Conflict Pool. Yet it was established jointly by the MOD and the Treasury in 2013, long before the launch of the CSSF. The MOD described its purpose then as “to fund the initial and short term costs of any unforeseen military activities, as authorised by the National Security Council”. This description matches that provided by the Government in its written evidence on the CSSF. Similarly, the CSSF ‘security and defence’ budget line includes £100 million drawn from the Treasury’s Special Reserve. Of this, £80 million is allocated to UK military activity to support Afghanistan’s security sector. The Special Reserve was created in 2002 to meet the additional costs of military operations including, at that time, in Afghanistan. Although the CSSF has a larger budget than the Conflict Pool which it replaced, this increase is not entirely accounted for by money newly allocated to programme funds.
64.The use of CSSF funding is limited by ring-fences. About half of the total CSSF budget of £1.127 billion in 2016–17 was earmarked by the Government for predetermined activity and standing commitments. The ‘peacekeeping’ budget is non-discretionary and covers the UK’s assessed contributions to the United Nations and European Union for peacekeeping missions. A third of the CSSF’s ‘security and defence’ budget is assigned to military contingencies, while more than half is earmarked for ongoing support to Afghanistan’s security sector. And the ‘delivery support’ budget is required to fund the Joint Programme Hub, the Stabilisation Unit and the National School of Government International. Dr Blair pointed out that the budget for regional and thematic programmes, which is the part of the CSSF that can be used flexibly to address developing situations on the ground, is actually “quite a small fund” in comparative terms. In addition, the National Security Adviser told us that if the UN or EU were to request extra money for peacekeeping operations, the regional and thematic programmes budget would be “squeezed” in order to pay for it.
65.This jigsaw of old and new, discretionary and non-discretionary funding gives the impression that the CSSF’s constituent pieces were not brought together because it made strategic sense to do so, but because they broadly fit under the same policy heading. We asked the National Security Adviser what effect this complex construction has on the management of the fund. He told us that
In an ideal world, one would not have all the ring-fences that one has within the CSSF, for instance. However, it is work in progress and it is an evolution. It is an improvement on the Conflict Pool, but the Treasury likes to retain some control over some of the individual elements, so it has built into the CSSF some mechanisms that I, as the SRO [Senior Responsible Officer], have to abide by. … It is a sign of the success of the fund, I think, that dependent-territory spending has been brought into it, but it is ring-fenced. Counterterrorism has come into it, but it is ring-fenced. The good governance fund has come into it, but it is ring-fenced. There are quite a lot of ring-fences in the overall fund.
Are you asking whether I, as the SRO, would prefer it to be much easier and more flexible? Yes, I probably would, but I understand the Treasury rules, and we have to work within them.
66.About half of the total £1.127 billion budget for the CSSF in 2016–17 is available to the Government to spend on discretionary programmes in regions and countries of strategic importance to the UK. The remaining sum has been earmarked by the Government for other conflict-related activity—such as a military contingency fund and ongoing support to Afghanistan—and for the UK’s assessed contributions to the UN and EU peacekeeping budgets. UN and EU peacekeeping budgets are not within the Government’s direct control, which means that CSSF discretionary programme funding might be used to make up any shortfall.
67.To provide the stability necessary to allow strategic multi-year programming, the Government should ring-fence the annual allocation to the discretionary programmes budget. If it is necessary to increase allocations to non-discretionary CSSF spending—for example, on peacekeeping contributions—this should be met from the Treasury’s Special Reserve, as is already the case for significant military operations.
68.The Government argued that the availability of both ODA and non-ODA funding for regional and thematic programmes is one advantage of the CSSF. In 2016–17, about two-fifths (£484 million) of the CSSF’s total budget of £1.127 billion counts as ODA. The use of this money is limited by OECD guidelines to activity that primarily supports the economic development and welfare of a developing country (see paragraph 11). There are no restrictions, however, on money that does not count as ODA (approximately £640 million in 2016–17). The CSSF’s combination of the two therefore enables a wider range of responses to conflict and instability overseas.
69.However, it is unclear how much of the CSSF’s non-ODA funding is available for regional and thematic programmes. Non-ODA elements within the CSSF include the majority of the non-discretionary ‘peacekeeping and multilaterals’ budget and a significant proportion of the ‘security and defence’ budget, given that £80 million from this budget line has been assigned to the UK’s long-term support for Afghanistan’s security sector. So although some £640 million of non-ODA funding is available under the CSSF in 2016–17, this sum is largely accounted for by the ring-fenced budget lines.
70.The Government advanced the proposition that blending Official Development Assistance funding with non-ODA funding within regional and thematic programmes is a key strength of the CSSF. However, it is unclear how much non-ODA funding is available for regional and thematic programmes, given that the ring-fenced areas of ‘peacekeeping and multilaterals’ and ‘security and defence’ account for a large proportion of the non-ODA budget. It is therefore unclear how much of an advantage this potential combination of ODA and non-ODA funding within the CSSF truly confers.
119 For a breakdown of the funding allocated to the CSSF in 2015–16 and 2016–17, see Table 1 on p. 7
120 FCO, , July 2016, p. 95
121 HM Government () para 47
122 HM Government () para 49
123 Defence Committee, Second Report of 2013–14, , HC 517, 1 July 2013, paras 15–17
124 Defence Committee, Second Report of 2013–14, , HC 517, 1 July 2013, para 15
125 HM Government () Annex A, para 51; Defence Committee, Second Report of 2013–14, , HC 517, 1 July 2013, paras 15–17. Then as now, funding for the DMAP was also provided on a 50:50 basis by the MOD and Treasury. See HM Government () Annex A, para 52
126 HM Government () Annex A, para 54
127 , House of Commons Library, 5 July 2012, pp. 4–7
128 HM Government () para 6
129 Q3 [Dr Stephanie Blair]
132 HM Government () para 30
133 HM Government () para 5
134 A breakdown of CSSF spending by budget line and ODA/non-ODA is not publicly available.
135 Andrew Sanderson, Finance Director of the FCO, told the Foreign Affairs Committee on 22 November 2016 that in 2015–16, of the £462 million allocated to the peacekeeping budget, about £58 million was counted as ODA. Oral evidence taken before the Foreign Affairs Committee on 22 November 2016, HC (2016–17) , Q145; HM Government () Annex A, para 54
6 February 2017